SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
June 3, 1999
-------------------------------
(Date of earliest event reported)
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-21830 25-1672791
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
980 North Michigan Avenue, Suite 1000, Chicago, Illinois 60611
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(Address of principal executive offices) (Zip Code)
312-280-8844
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(Registrant's telephone number, including area code)
JOHNSTOWN AMERICA INDUSTRIES, INC.
(Former name, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 3, 1999, Transportation Technologies Industries, Inc.
(formerly, Johnstown America Industries, Inc.) (the "Company") completed
the sale of its freight car operations, including Johnstown America
Corporation ("JAC"), Freight Car Services, Inc. and JAIX Leasing Company,
to a newly-formed company (the "Buyer") that will operate under the JAC
name, pursuant to a previously announced Share Purchase Agreement dated May
10, 1999, as amended on June 3, 1999. The Company received consideration
consisting of approximately $103.9 million in cash, contingent additional
consideration of $20 million and a 20 percent equity interest in the Buyer.
In addition, the Buyer assumed substantially all of the liabilities of the
freight car operations, including $14.4 million of debt. The cash
consideration received by the Company is subject to working capital
adjustments to be settled within 60 days of the closing date.
Ownership of the Buyer includes preexisting senior management of
freight car operations and Camillo M. Santomero, III, a director of the
Company; certain of Buyer's financing sources; and the Company.
ITEM 5. OTHER EVENTS.
Effective June 14, 1999, the name of the Company was changed from
"Johnstown America Industries, Inc." to "Transportation Technologies
Industries, Inc."
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(a) Financial Statements of Businesses Acquired
Not applicable.
(b) Pro Forma Financial Information.
Unaudited Pro Forma Combining Financial Statements of
Transportation Technologies Industries, Inc., filed herewith.
(c) Exhibits.
2.1 Share Purchase Agreement, dated May 10, 1999, between the Company
and the Buyer (incorporated by reference from Exhibit 99.2 to the
Company's current report on Form 8-K filed May 12, 1999).
2.2 Amendment No. 1 to the Share Purchase Agreement, dated
June 3, 1999, between the Company and the Buyer, filed herewith.
99.1 Press Release issued by the Company on June 3, 1999, filed
herewith.
99.2 Press Release issued by the Company on June 14, 1999, filed
herewith.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Transportation Technologies Industries, Inc.
Date: June 21, 1999 By: /s/ Kenneth M. Tallering
--------------------------------------------
Kenneth M. Tallering
Vice President, Secretary and
General Counsel
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC.
UNAUDITED PRO FORMA COMBINING FINANCIAL STATEMENTS
The unaudited pro forma combining financial statements of the Company
reflect certain consummated transactions as if such transactions had
occurred on March 31, 1999 for purposes of the pro forma combining balance
sheet and on January 1, 1998 for purposes of the pro forma combining statements
of income. The transactions included in the pro forma statements are described
below:
o On April 29, 1999, the Company acquired certain net assets of Imperial
Group, Inc. (Imperial). The purchase price was approximately $60.1
million consisting of $57.4 million in cash and 156,740 shares of the
Company's common stock valued at $2.8 million. The acquisition was
accounted for under the purchase method of accounting. The purchase
price is subject to a future working capital adjustment to be settled
within 60 days of the closing date. The purchase price is also subject to a
contingent earn-out of up to $4.0 million, based on the results of
Imperial's Washington plant for the 24 months ended April 2000. The
Company also incurred transaction costs of $0.7 million and issued
36,500 shares of restricted stock to two Imperial employees valued at
$0.6 million, which vest ratably over three years if employment
continues.
The historical results of Imperial included in the accompanying pro
forma statements exclude adjustments for the effect of
a six month strike at a major customer, start up costs of a new
manufacturing plant and other non recurring items which management
estimates resulted in a $7.5 million and a $4.3 million reduction in
revenue and operating income, respectively, in 1998.
o In conjunction with the acquisition of Imperial, the Company, on April
29, 1999, entered into a new Senior Bank Credit Facility. The new
facility is comprised of a $50 million Term A Loan, a $50 million Term B
Loan and an undrawn $75 million Revolving Credit Facility. Proceeds were
used to finance the Imperial acquisition, to refinance the Company's
then outstanding senior bank debt of $36.6 million (resulting in an
extraordinary non-cash after tax charge of $1.7 million), and for
working capital and other general corporate purposes. The Company
incurred and deferred $2.2 million of costs in obtaining the new
financing which will be amortized over the term of the related debt (5-6
years).
o On May 17, 1999, the Company acquired certain net assets of EMI Company
(EMI) for $18.7 million in cash, subject to a future working capital
adjustment to be settled within 60 days of the closing date. The acquisition
was accounted for under the purchase method of accounting.
o On June 3, 1999, the Company completed the sale of its freight car
operations comprised of three wholly-owned subsidiaries - Johnstown
America Corporation, Freight Car Services, Inc., and JAIX Leasing
Company. The Company received consideration consisting of approximately
$103.9 million in cash, contingent additional consideration of $20
million and a 20 percent equity interest in the Buyer. In addition, the
Buyer assumed substantially all of the liabilities of the freight car
operations, including $14.4 million of debt. The cash consideration
received by the Company is subject to working capital adjustments to be
settled within 60 days of the closing date. The 20 percent equity
interest in the Buyer is comprised of common and preferred stock, some
of which is non-voting. Further, the Company's rights with respect to
voting and transferability of its equity interest are limited and, in
particular, the Company granted a proxy to vote its equity interest to
another shareholder of Buyer under certain circumstances. The sale
resulted in a estimated pretax gain of $47.6 million after consideration
of estimated transaction costs of $4.0 million and a related pension
curtailment loss of $0.3 million. The after-tax gain on the disposition
of the Railcar Business, estimated at $24.3 million, will be recorded in
the Company's results for the second quarter of 1999. Approximately $2.5
million of additonal gain was deferred due to the Company's continuing
interest in the Railcar Business. Proceeds from the $20.0 million
contingent additional consideration will be recorded as a gain, if and
when collected. Also as a result of the sale, $75.0
million of senior bank debt was paid subsequent to the acquisition which
will result in the write off of $1.0 million of deferred financing
costs. When the final working capital adjustment is determined, the
Company will be required to use any additional after-tax proceeds to pay
down additional senior bank debt.
For purposes of the accompanying pro forma combining financial statements,
disposition and acquisition related adjustments have been reflected on an
estimated basis using the most recent information available. All
acquisition related adjustments have been made pursuant to the purchase
method of accounting. No assurances can be given that the final
determination of the fair value of assets acquired and liabilities assumed
by the Company in the acquisitions will not differ from the adjustments
presented herein. Such determinations will be made within one year of the
related acquisition and are not expected to be materially different from
the estimates used herein.
The pro forma combining financial statements do not purport to be indicative
of the results that actually would have been obtained had all the
transactions been completed as of the assumed dates and for the periods
presented and are not intended to be a projection of future results or
trends. Operating results for any interim period are not necessarily
indicative of results that may be expected for the full year.
The pro forma information presented should be read in conjunction with the
consolidated financial statements and related notes of the Company included
in the Company's Annual Report on Form 10-K for the year ended December 31,
1998, and in the Company's Form 10-Q for the quarter ended March 31, 1999.
<TABLE>
<CAPTION>
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINING BALANCE SHEET
As of March 31, 1999
(In thousands)
Transportation Acquisition Disposition
Technologies Acquired Adjustments Disposed Adjustments
Industries Inc. Businesses (Note 1) Subtotal Operations (Note 2) Total
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 36,543 $ 98 $(15,365)(a) $ 21,276 $ (6,993) $ 28,872(i) $ 43,155
Accounts receivable, net 97,328 13,924 -- 111,252 (32,066) -- 79,186
Inventories 63,512 9,966 -- 73,478 (36,840) -- 36,638
Prepaid expenses and other --
current assets 16,261 245 -- 16,506 (272) (4,789)(j) 11,445
---------------------------------------------------------------------------
Total current assets 213,644 24,233 (15,365) 222,512 (76,171) 24,083 170,124
Property, plant and
equipment, net 113,088 48,564 (9,620)(b) 152,032 (32,416) -- 119,616
Leasing business assets, net 18,935 -- -- 18,935 (18,935) -- --
Deferred financing costs, net 6,821 -- (562)(c) 6,259 (556) (964)(k) 4,739
Investment and other assets 1,664 761 (722)(b) 1,703 -- -- 1,703
Intangible assets, net 236,280 3,056 29,285 (d) 268,621 (7,109) -- 261,512
----------------------------------------------------------------------------
$ 590,432 $ 76,614 $ 3,016 $670,062 $(135,187) $ 23,119 $557,994
----------------------------------------------------------------------------
Current Liabilities:
Accounts payable $ 72,640 $ 12,126 $ -- $ 84,766 $(51,899) $ 15,523(l) $ 48,390
Accrued expenses and other
payables 74,402 2,907 (836)(e) 76,473 (21,668) 23,267(m) 78,072
Current maturities of
long-term debt and
capital lease 701 -- 6,375(f) 7,076 (483) (4,781)(n) 1,812
----------------------------------------------------------------------------
Total current liabilities 147,743 15,033 5,539 168,315 (74,050) 34,009 128,274
Long-term debt and capital
lease, less
current maturities 43,254 -- 56,993(f) 100,247 (5,280) (70,219)(n) 24,748
JAIX Leasing debt, less
current maturities 8,586 -- -- 8,586 (8,586) -- --
Senior subordinated notes 182,250 -- -- 182,250 -- -- 182,250
Deferred income tax
liabilities 34,259 -- -- 34,259 -- (1,701)(j) 32,558
Other long-term liabilities 48,770 337 653 (b) 49,760 (11,652) 300(o) 38,408
Shareholders' Equity:
Preferred stock -- -- -- -- -- -- --
Common stock 100 -- 2 (g) 102 -- -- 102
Paid-in capital 58,655 -- 3,403 (g) 62,058 -- -- 62,058
Unearned compensation (1,522) -- (643)(g) (2,165) -- -- (2,165)
Retained earnings 68,347 -- (1,687)(h) 66,660 -- 25,111(p) 91,771
Employee receivables for
stock purchases (10) -- -- (10) -- -- (10)
- -----------------------------------------------------------------------------------------------------------
Total shareholders'
equity 125,570 -- 1,075 126,645 -- 25,111 151,756
- ----------------------------------------------------------------------------------------------------------
$ 590,432 $ 15,370 $ 64,260 $670,062 $(99,568) $ (12,500) $557,994
==========================================================================================================
</TABLE>
The accompanying notes to unaudited combining financial statements are an
integral part of this statement.
<TABLE>
<CAPTION>
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINING STATEMENT OF INCOME
For the Three Months Ended March 31, 1999
(In thousands, except per share data)
Transportation Acquisition Disposition
Technologies Acquired Adjustments Disposed Adjustments
Industries Inc. Businesses (Note 3) Subtotal Operations (Note 4) Total
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net manufacturing sales $ 295,882 $ 39,399 $ -- $ 335,281 $(178,580)$ -- $156,701
Leasing revenue 2,478 -- -- 2,478 (2,478) -- --
---------------------------------------------------------------------------
Total revenue 298,360 39,399 -- 337,759 (181,058) -- 156,701
Cost of sales-manufacturing 248,049 34,955 (204)(a) 282,800 (155,400) -- 127,400
Cost of leasing 1,406 -- -- 1,406 (1,406) -- --
---------------------------------------------------------------------------
Gross profit 48,905 4,444 204 53,553 (24,252) -- 29,301
Selling, general and
administrative
expense 14,360 2,026 54(b) 16,440 (4,925) 701(g) 12,216
Amortization expense 2,098 43 36(c) 2,177 (406) -- 1,771
---------------------------------------------------------------------------
Operating income 32,447 2,375 114 34,936 (18,921) (701) 15,314
Other (income) expense:
Interest expense 6,952 756 188(d) 7,896 8 (1,701)(h) 6,203
Interest expense-leasing 218 -- -- 218 (218) -- --
Interest income (224) (35) -- (259) 94 -- (165)
---------------------------------------------------------------------------
Income before income taxes
and extraordinary item 25,501 1,654 (74) 27,081 (18,805) 1,000 9,276
Provision for income taxes 10,585 45 (30)(e) 10,600 (7,241) 400(i) 3,759
---------------------------------------------------------------------------
Income before extraordinary
item $ 14,916 $ 1,609 $ (44) $ 16,481 $(11,564) $ 600 $ 5,517
===========================================================================
Basic earnings per share
before extraordinary item $ 1.50 $ 1.64 $ 0.55
=========== =========== =======
Diluted earnings per share
before extraordinary item $ 1.47 $ 1.59 $ 0.53
=========== =========== =======
Basic weighted average shares
outstanding 9,913 157(f) 10,070 10,070
=========== ========= =========== =======
Diluted weighted average
equivalents and
shares outstanding 10,148 193(f) 10,341 10,341
=========== ========= =========== =======
</TABLE>
The accompanying notes to unaudited combining financial statements are an
integral part of this statement.
<TABLE>
<CAPTION>
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINING STATEMENT OF INCOME For
the Year Ended December 31, 1998
(In thousands, except per share data)
Transportation Acquisition Disposition
Technologies Acquired Adjustments Disposed Adjustments
Industries Inc. Businesses (Note 3) Subtotal Operations (Note 4) Total
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net manufacturing sales $ 957,762 $ 136,346 -- $1,094,108 $(524,196) -- $569,912
Leasing revenue 8,296 -- -- 8,296 (8,296) -- --
----------------------------------------------------------------------------------
Total revenue 966,058 136,346 -- 1,102,404 (532,492) -- 569,912
Cost of sales-manufacturing 821,005 121,716 (816) a 941,905 (478,053) -- 463,852
Cost of leasing 4,895 -- -- 4,895 (4,895) -- --
----------------------------------------------------------------------------------
Gross profit 140,158 14,630 816 155,604 (49,544) -- 106,060
Selling, general and
administrative
expense 53,005 9,374 214(b) 62,593 (16,906) 2,341(g) 48,028
Amortization expense 8,557 519 290(c) 9,366 (1,784) -- 7,582
Gain on sale of leased
freight cars (1,223) -- -- (1,223) 1,223 -- --
Pension termination gain (1,688) -- -- (1,688) -- -- (1,688)
Patent lawsuit settlement (16,750) -- -- (16,750) 16,750 -- --
----------------------------------------------------------------------------------
Operating income 98,257 4,737 312 103,306 (48,827) (2,341) 52,138
Other (income) expense:
Interest expense 31,189 3,070 (80)(d) 34,179 (2,485) (6,807)(h) 24,887
Interest expense-leasing 1,228 -- -- 1,228 (1,228) -- --
Interest income (2,094) -- -- (2,094) 536 -- (1,558)
-----------------------------------------------------------------------------------
Income before income
taxes and
extraordinary item 67,934 1,667 392 69,993 (45,650) 4,466 28,809
Provision for income taxes 28,933 80 157(e) 29,170 (16,785) 1,786(i) 14,171
----------------------------------------------------------------------------------
Income before extraordinary
item $ 39,001 $ 1,587 $ 235 $ 40,823 $ (28,865) $ 2,680 $ 14,638
===============================================================================
Basic earnings per share
before
extraordinary item $ 3.96 $ 4.08 $ 1.46
========== ========== ========
Diluted earnings per share
before
extraordinary item $ 3.85 $ 3.96 $ 1.42
========== ========== ========
Basic weighted average shares
outstanding 9,838 157(f) 9,995 9,995
========== ============ ========= ========
Diluted weighted average
equivalents
and shares outstanding 10,122 193(f) 10,315 10,315
========== ============ ========= ========
</TABLE>
The accompanying notes to unaudited combining financial statements are an
integral part of this statement.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINING FINANCIAL STATEMENTS
NOTE 1. BALANCE SHEET-ACQUISITION ADJUSTMENTS
(a) Represents the excess of the proceeds from the new bank credit
facility ($100.0 million) over the cash purchase price of EMI and
Imperial ($76.1 million), acquisition and financing costs paid at
closing ($2.1 million), debt retirements ($36.6 million), and related
accrued interest ($0.6).
(b) Represents the revaluation of certain Imperial and EMI assets and
liabilities to estimated market value and the application of negative
goodwill to EMI property as follows (in millions):
Imperial property, plant and equipment $ 1.7
EMI property, plant and equipment (11.3)
Pension assets (0.7)
Pension obligations 0.7
(c) Represents estimated costs incurred in obtaining the new bank debt
facility in conjunction with the Imperial acquisition ($2.2 million),
net of the write off of unamortized deferred financing costs
associated with the debt retired in the refinancing ($2.8 million).
(d) Represents aggregate purchase price of Imperial ($60.1 million) plus
transaction costs ($0.7 million) less the fair market value of the
tangible net assets of Imperial ($28.4 million) and the elimination of
previously recorded intangible assets ($3.1 million).
(e) Represents the income tax effect (at 40%) of the write off of
unamortized deferred financing costs related to retired debt ($1.1
million), plus the payment of accrued interest associated with that
debt ($0.5 million), less estimated transaction costs not paid at
closing ($0.8 million).
(f) Represents borrowings under the new bank credit facility to fund a
portion of the Imperial acquisition and to refinance certain
previously existing debt of the Company ($100.0 million), net
of debt retired in the refinancing ($36.6 million).
(g) Represents issuance of 156,740 shares of the Company's $0.01 par value
common stock as part of the purchase price for Imperial (valued at
$2.8 million) and 36,500 shares of restricted common stock issued to
Imperial employees (valued at $0.6 million).
(h) Represents the after-tax extraordinary non-cash write-off of
unamortized deferred financing costs related to debt retired in the
refinancing.
TRANSPORTATION TECHNOLOGIES INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINING FINANCIAL STATEMENTS
NOTE 2. BALANCE SHEET-DISPOSITION ADJUSTMENTS
(i) Represents gross cash proceeds from the sale of the Railcar Business
($103.9 million) less cash used to retire outstanding indebtedness
($75.0 million.)
(j) Represents the write-off of deferred taxes related to the Railcar
Business.
(k) Represents the write-off of unamortized deferred financing costs
related to debt retired with the proceeds from the sale of the Railcar
Business.
(l) Represents estimated amounts due to the buyer of the Railcar Business
as a result of purchase price adjustments pursuant to the Share
Purchase Agreement as if such adjustments were computed at March 31,
1999. Based on the working capital of the Railcar Business at June 3,
1999, there was no incremental working capital adjustment.
(m) Represents estimated income taxes due on the taxable gain resulting
from the sale of the Railcar Business ($19.7 million) less the income
tax effect (at 40%) of the write-off of unamortized deferred financing
costs ($0.4 million), plus the accrual for estimated transaction costs
not paid at closing ($4.0 million.)
(n) Represents debt retired with proceeds from the sale of the Railcar
Business.
(o) Represents additional pension liabilities due to the curtailment of
several pension plans. In connection with the sale of the Railcar
Business, the Company retained certain pension obligations related
to the pre-closing period and the related assets.
(p) Represents the after-tax gain on the sale of the Railcar Business
($25.7 million) net of the after-tax extraordinary loss from the
write off of unamortized deferred financing costs related to debt
retired with the proceeds from that sale ($0.6 million.)
NOTE 3. INCOME STATEMENT-ACQUISITION ADJUSTMENTS
(a) Represents reduction of depreciation expense resulting from the net
decrease in property, plant and equipment upon revaluing such assets
and applying negative goodwill realized in the EMI acquisition to such
assets.
(b) Represents the amortization of unearned compensation related to
restricted stock issued in conjunction with the Imperial acquisition.
(c) Represents amortization of acquired intangible assets over a forty
year life, net of the elimination of previously recorded amortization
of EMI and Imperial intangible assets.
(d) Represents interest related to $100.0 million of debt incurred in the
refinancing, net of eliminated interest related to EMI and Imperial
debt not acquired in the acquisitions and Company debt retired
in the refinancing (in thousands):
Three Months
Ended Year Ended
March 31, 1999 December 31, 1998
---------------------------------------
Interest on $100.0 million at 7.5% $ 1,875 $ 7,500
Related deferred financing cost
amortization 99 396
EMI and Imperial historical interest (756) (3,070)
Interest on Company retired debt (810) (3,238)
Related deferred financing cost
amortization (220) (1,668)
---------------------------------------
$ 188 $ (80)
=======================================
(e) Income taxes related to above adjustments at an assumed rate of 40%
(f) Represents 156,740 shares of the Company's common stock issued in the
Imperial acquisition plus, for diluted shares, 36,500 shares of
restricted common stock issued to Imperial employees.
NOTE 4. INCOME STATEMENT-DISPOSITION ADJUSTMENTS
(g) Add back to continuing operations of certain corporate administrative
expenses which have been allocated to and are reflected in the Railcar
Business operating result. These amounts represent the portion of the
$0.9 million and 3.3 million of corporate costs allocated to the
Railcar Business during the three months ended March 31, 1999 and the
year ended December 31, 1998, respectively, which management estimates
would not have been incurred had the Railcar Business sold in January
1998.
(h) Elimination of interest expense (including amortization of related
deferred financing costs) assuming the use of $75.0 million of net
after-tax proceeds from the sale of the Railcar Business to
reduce outstanding debt.
(i) Income taxes related to the above adjustments at an assumed tax rate of
40%
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2.1 Share Purchase Agreement, dated May 10, 1999,
between the Company and the Buyer (incorporated
by reference from Exhibit 99.2 to the Company's
current report on Form 8-K filed May 12, 1999).
2.2 Amendment No. 1 to the Share Purchase
Agreement, dated June 3, 1999, between the Company
and the Buyer.
99.1 Press Release issued by the Company on June 3, 1999.
99.2 Press Release issued by the Company on June 14, 1999.
Exhibit 2.2
AMENDMENT NO. 1 TO THE SHARE PURCHASE AGREEMENT
This AMENDMENT NO. 1, dated as of June 3,1999 (this "Amendment"), by
and between Johnstown America Industries, Inc., a Delaware corporation
("Seller"), and Rabbit Hill Holdings, Inc., a Delaware corporation
("Buyer"), amends the Share Purchase Agreement, dated as of May 10, 1999
(the "Share Purchase Agreement"), by and between Seller and Buyer.
RECITALS
WHEREAS, Buyer and Seller are currently parties to the Share
Purchase Agreement;
WHEREAS, the parties hereto wish to amend the Share Purchase
Agreement as herein provided;
NOW, THEREFORE, in consideration of the foregoing premises and for
other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. Capitalized terms which are used but not defined
herein shall have the meaning ascribed to such terms in the Share Purchase
Agreement.
2. Amendments to Share Purchase Agreement
(A) The first sentence of Section 1.2 of the Share Purchase
Agreement is hereby amended by deleting the amount "$110" and replacing
such amount with
$109".
(B) The first sentence of Section 1.2 of the Share Purchase
Agreement is further amended by deleting that portion of the first sentence
marked with "(ii)" and replacing such portion with the following:
"(ii) 2,500 shares of the Class A Voting Common Stock,
par value $0.01 per share, of Buyer, 1,000 shares of Class B
Non-Voting Common Stock, par value $0.01 per share, of Buyer
and 3,500 shares of Series B Non-Voting Preferred Stock of
Buyer."
(C) The third sentence of Section 1.2 of the Share Purchase
Agreement is hereby amended by deleting that portion of the third sentence
marked with "(y)" and replacing such portion with the following:
"(y) 2,500 shares of the Class A Voting Common Stock of Buyer, 1,000 shares
of Class B Non-Voting Common Stock of Buyer and 3,500 shares of Series B
Non-Voting Preferred Stock of Buyer."
(D) Section 1.3(b)(ii) of the Share Purchase Agreement is
hereby amended by deleting that portion of the first sentence marked with
"(B)" and replacing such portion with the following:
"(B) 2,500 shares of the Class A Voting Common Stock of
Buyer, 1,000 shares of Class B Non-Voting Common Stock of Buyer
and 3,500 shares of Series B Non-Voting Preferred Stock of
Buyer."
(E) Section 1.3(b)(iii) of the Share Purchase Agreement is
hereby amended by deleting Section 1.3(b)(iii) in its entirety and
replacing such section with the following:
"Section 1.3(b)(iii). Seller, Buyer and each of the other
holders of capital stock of Buyer as of the Closing Date shall
enter into a shareholders' agreement, which shall contain the
terms set forth on Exhibit H (the "Shareholders' Agreement")."
(F) The introductory clause of Section 1.4(a) of the Share
Purchase Agreement which reads "At least three days prior to Closing" is
hereby amended by replacing such clause with the following:
"At the Closing"
(G) Section 1.6(c)(ii) of the Share Purchase Agreement is
hereby amended by deleting and replacing both occurrences of the phrase
"common stock" in that portion of the section marked with "(B)" with the
following:
"capital stock"
(H) Section 2.10 (c) of the Share Purchase Agreement is hereby
amended by adding the following language to the beginning of the first
sentence therein:
"Except as set forth on Schedule 2.10(c),"
(I) The second sentence of Section 3.3(b) of the Share Purchase
Agreement is hereby amended by deleting the second sentence of Section
3.3(b) in its entirety and replacing such section with the following:
"All certificates representing the Class A Voting Common
Stock of Buyer, all certificates representing the Class B
Non-Voting Common Stock of Buyer and all certificates
representing the Series B Non-Voting Preferred Stock of Buyer
to be delivered to Seller pursuant to Section 1.3(b)(ii) shall
be duly authorized, validly issued, fully paid and
non-assessable and free of preemptive (or similar) rights."
(J) The introductory clause in Section 4.7(d) part "(i)" of the
Share Purchase Agreement which states "at least 10 days prior to the
Closing Date" is hereby amended by replacing such clause with the
following:
"prior to the Closing Date"
(K) Insert a new Section 4.7(k) immediately after Section
4.7(j) of the Share Purchase Agreement as follows:
"(k) Section 197 Election. With respect to the sale of
each of the Railcar Subsidiaries pursuant to this Agreement and
the corresponding Elections, Seller and the Railcar
Subsidiaries shall timely file with the Internal Revenue
Service a protective election under Section 197(f)(9)(B)(ii) of
the Code (the "Section 197 Election") and shall take all such
actions necessary and appropriate (including filing such forms,
returns, elections, schedules and other documents as may be
required) to perfect the Section 197 Election in accordance
with the provisions of the Code and applicable Treasury
regulations. Seller shall report the sale of each of the
Railcar Subsidiaries pursuant to this Agreement and the
corresponding Elections consistent with the Section 197
Election and shall take no position to the contrary thereto in
any Tax Return or in any proceeding before any Tax Authority or
otherwise."
(L) Section 4.8 of the Share Purchase Agreement is hereby
amended by deleting Section 4.8 in its entirety and replacing it with the
following:
"Section 4.8. Incremental Tax Resulting from the Elections.
(a) Buyer shall reimburse Seller as provided in this Section
4.8(a) for any incremental Taxes payable by Seller or any of the Railcar
Subsidiaries resulting from making the Elections (and any comparable
elections under the provisions of state and local tax law) (the
"Incremental Taxes") with respect to the taxable year that includes (i) the
Closing Date and (ii) if applicable, Seller's receipt of the Contingent
Additional Consideration, in each case, "grossed up" to reflect the
taxability to Seller of the receipt of any payments pursuant to this
Section 4.8(a). Seller shall provide to Buyer a statement (accompanied by
appropriate supporting documentation) calculating in reasonable detail
Buyer's reimbursement obligation pursuant to this Section 4.8(a). Buyer
shall have no reimbursement obligation pursuant to this Section 4.8(a)
until Buyer has received such statement and such supporting documentation.
If for any reason Buyer does not agree with Seller's calculation of Buyer's
reimbursement obligation pursuant to this Section 4.8(a), Buyer shall
notify Seller of its disagreement within ten days of receiving a copy of
such statement and such supporting documentation, and such dispute shall be
resolved pursuant to the Tax Dispute Resolution Mechanism. If Buyer agrees
with Seller's calculation of Buyer's reimbursement obligation, Buyer shall
pay to Seller the amount of Buyer's reimbursement obligation at the time
specified in Section 4.7(a)(v). Seller shall return to Buyer any amount
reimbursed by Buyer pursuant to this Section 4.8(a) to the extent that
Seller receives any refunds of any such Incremental Taxes.
(b) Notwithstanding any other provision of this Agreement to
the contrary, (i) Buyer shall be responsible for, and shall indemnify and
hold Seller harmless against, any liability for Taxes imposed on Seller or
any of the Railcar Subsidiaries resulting from or relating to any transfer
of assets from a Railcar Subsidiary to any of its subsidiaries after May
10, 1999 and on or prior to the Closing Date, (ii) Seller and Buyer shall
jointly control the resolution of any Tax Claim relating to the
indemnification obligation described in subclause (i) hereof, and (iii)
any indemnity payments made pursuant to this Section 4.8(b) shall be
"grossed up" to reflect the taxability to Seller of the receipt of any such
payments."
(M) Insert new Sections 4.15, 4.16 and 4.17 immediately after
Section 4.14 of the Share Purchase Agreement as follows:
"Section 4.15. Payment of Contingent Additional Consideration.
Upon the occurrence of any Triggering Event, if the payment by Buyer to
Seller of the Contingent Additional Consideration is restricted under the
terms of the Senior Secured Debt and the Senior Notes, then Buyer shall
either obtain the consent from all parties necessary to make such payment
or use its best efforts to replace or refinance the Senior Secured Debt and
the Senior Notes such that the payment is permitted.
"Section 4.16. Operating Leases. Immediately after Closing,
Buyer shall use its best efforts to release Seller of its obligations and
substitute Buyer under the following operating leases: (i) the Bankers
Direct Leasing Agreement and (ii) the GECC Leasing Agreement."
"Section 4.17. Transitional Services Agreement. Buyer shall
enter into a transitional services agreement containing customary terms
with Seller providing for the hourly services of Kelly Bodway based on an
allocable portion of total employment cost."
(N) Section 5.3 of the Share Purchase Agreement is hereby
amended by deleting the first sentence in its entirety and replacing such
sentence with the following language:
"As soon as practicable following the Closing Date, Buyer
shall establish defined benefit pension plans for the Railcar
Subsidiaries' employees who participated in such plans
sponsored by Railcar Subsidiaries."
(O) Section 5.4(b) of the Share Purchase Agreement is hereby
amended by deleting the second sentence in its entirety and replacing such
sentence with the following language:
"As soon as practicable after assuming sponsorship of the
Johnstown Savings Plan, Seller will spinoff from the Johnstown
Savings Plan a new plan (the "New Johnstown Savings Plan")
which will contain the account balances of all Railcar
Subsidiaries employees who are participants in the Johnstown
Savings Plan on the date of the spinoff."
(P) Section 6.2 of the Share Purchase Agreement is hereby
amended by adding a new subsection (d) as follows:
"(d) Seller shall have received the consideration
provided for in that certain securities purchase agreement
dated as of June 3, 1999."
(Q) Insert a new definition immediately following "Rules" in
the Share Purchase Agreement as follows:
"Section 197 Election" shall have the meaning set forth
in Section 4.7(k)."
(R) Schedule 2.5 of the Share Purchase Agreement is hereby
amended by adding the items set forth on the Addition to Schedule 2.5
attached hereto.
(S) Schedule 2.8 of the Share Purchase Agreement is hereby
amended by adding the items set forth on the Addition to Schedule 2.8
attached hereto.
(T) Schedule 2. 10 of the Share Purchase Agreement is hereby
amended by adding the items set forth on the Addition to Schedule 2.10
attached hereto.
(U) Schedule 2.12 of the Share Purchase Agreement is hereby
amended by deleting "none" and adding the items set forth on the Addition
to Schedule 2.12 attached hereto.
(V) Schedule 2.14 of the Share Purchase Agreement is hereby
amended by deleting "none" and adding the items set forth on the Addition
to Schedule 2.14 attached hereto.
(W) Schedule 2.16 of the Share Purchase Agreement is hereby
amended by adding the items set forth on the Addition to Schedule 2.16
attached hereto.
(X) Schedule 2.17 of the Share Purchase Agreement is hereby
amended by adding the items set forth on the Addition to Schedule 2.17
attached hereto.
(Y) Schedule 2.21 of the Share Purchase Agreement is hereby
amended by adding the items set forth on the Addition to Schedule 2.21
attached hereto.
(Z) Exhibit D of the Share Purchase Agreement is hereby amended
by deleting Exhibit D in its entirety and replacing it with Exhibit D
attached hereto.
(AA) Exhibit I of the Share Purchase Agreement is hereby
amended by deleting Exhibit I in its entirety and replacing it with Exhibit
I attached hereto.
(BB) Exhibit J of the Share Purchase Agreement is hereby
amended by deleting Exhibit J in its entirety and replacing it with Exhibit
J attached hereto.
3. Governing Law. This Amendment shall be governed by and construed
in accordance with the internal laws of Delaware applicable to contracts
made herein.
4. Counterparts. This Amendment may be executed in counterparts, each
of which shall be deemed to be an original, but all of which shall
constitute one and the same Amendment.
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Amendment as of the date
first above written.
JOHNSTOWN AMERICA INDUSTRIES, INC.
By:/s/ Kenneth M. Tallering
__________________________________
Name: Kenneth M. Tallering
Title: Vice President, Secretary and
General Counsel
RABBIT HILL HOLDINGS, INC.
By: /s/ Camillo Santomero, III
__________________________________
Name: Camillo Santomero, III
Title: President
Exhibit 99.1
(BW)(IL-JOHNSTOWN-AMERICA)(JAII) Johnstown America Industries Inc.
Completes Sale of Freight Car Operations and Announces New Name
Business Editors
CHICAGO--(BUSINESS WIRE)--June 3, 1999--Johnstown America Industries, Inc.
(NASDAQ: JAII) announced today that it has completed the sale of its
freight car operations, including Johnstown America Corporation, Freight
Car Services, Inc. and JAIX Leasing Company, to a newly-formed company that
will operate under the Johnstown America Corporation (JAC) name. JAII also
will be changing its name to Transportation Technologies Industries, Inc.,
when the new name becomes effective in the next few weeks. The company's
new stock symbol will become TTII.
"The Transportation Technologies Industries name symbolizes the completion
of our transformation from a freight car manufacturer and our commitment to
becoming a leader in the heavy-duty truck components business," said Thomas
M. Begel, chairman, president and chief executive officer. "Rapid
consolidation and increasing reliance on technology in this industry are
creating unprecedented growth opportunities, and we intend to be among
those who thrive in this exciting environment."
Terms of the sale included a cash payment of approximately $100 million and
a contingent additional purchase price payment of $20 million. Transportation
Technologies Industries also retained a 20 percent equity interest in the
newly-formed Johnstown America Corporation. In addition, the buyer assumed
substantially all existing liabilities of the freight car operations
including $14.4 million of debt. Transportation Technologies Industries
will use the after-tax cash proceeds of approximately $75 million to reduce
its senior bank debt, reducing the company's debt-to-capitalization ratio to
approximately 58% vs. 70% at March 31, 1999, on a pro forma basis for the
acquisition of the Imperial Group.
"Focusing all of our resources and energies on the heavy-duty truck
components business will help create shareholder value by reducing our
exposure to market cyclicality, improving our capital structure and
enabling us to participate in the significant growth opportunities in both
the OEM and aftermarket segments of the industry," Begel said.
The company also anticipates that the sale of its freight car operations
will have a positive long-term impact on share valuation. "Our truck
components operations have produced consistent revenues and earnings, and
investors now will be able to value the company based on the performance
and inherent value of these market-leading businesses," Begel said. "In
addition, shares of truck components manufacturers typically sell at
significantly higher price/earnings multiples than those of companies in
the more-volatile freight car industry."
Transportation Technologies Industries, Inc. is a leading manufacturer of
components for heavy-duty and medium-duty trucks and buses and the truck
parts aftermarket. Product lines include: Gunite wheel-end components;
Brillion custom iron castings; Imperial body and chassis components;
Bostrom truck and bus seating systems; and Fabco steerable drive axles and
gearboxes. The company is headquartered in Chicago, Illinois and has
manufacturing operations in Alabama, California, Illinois, Indiana,
Pennsylvania, Tennessee, Texas, Washington and Wisconsin. Consolidated pro
forma revenues of the truck components operations that now comprise the
company were about $575 million in 1998 and about $155 million in the first
quarter of 1999.
The statements herein, which are not historical facts, including statements
about future expectations, are "forward-looking statements" that involve
certain risks and uncertainties that could cause actual future results to
differ materially from those stated. These risks are spelled out more fully
in the company's SEC filings. The company assumes no obligation to update
its forward-looking statements.
CONTACT: Johnstown America Industries, Inc.
Andrew M. Weller, 312/280-8844
Exhibit 99.2
FOR IMMEDIATE RELEASE Contact: Andrew M. Weller
Executive Vice
President and
Chief Financial
Officer
312/280-8844
JOHNSTOWN AMERICA INDUSTRIES, INC. ANNOUNCES NEW NAME
Chicago, IL, June 11, 1999 - Johnstown America Industries, Inc.
(NASDAQ: JAII) said today that its previously-announced name change to
Transportation Technologies Industries, Inc., is now effective. The
company's new stock symbol is TTII.
The company changed its name to reflect its heightened focus on
the heavy-duty truck components business following the divestiture of its
freight car operations including Johnstown America Corporation.
Transportation Technologies Industries, Inc. is a leading
manufacturer of components for heavy-duty and medium-duty trucks and buses
and the truck parts aftermarket. Product lines include: Gunite wheel-end
components; Brillion custom iron castings; Imperial body and chassis
components; Bostrom truck and bus seating systems; and Fabco steerable
drive axles and gearboxes. The company is headquartered in Chicago,
Illinois and has manufacturing operations in Alabama, California, Illinois,
Indiana, Pennsylvania, Tennessee, Texas, Washington and Wisconsin.
Consolidated pro forma revenues of the truck components operations that now
comprise the company were about $575 million in 1998 and about $155 million
in the first quarter of 1999.
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